A Look At Ecommerce And Business Culture In Uganda

Traditionally in Uganda, business has been created based on the standard models of manufacturing, distribution, and retail. It often involves opening up a brick and mortar store that services an identified segment of customers.

Only 5 years ago, entrepreneurial urban youths were interested in apprenticeships or focussed opening up retail shops and boutiques. Today, however, the wealth that is breeding a new generation of millionaires in Uganda is being created through new and unconventional business opportunities.

With a steady increase in Internet connectivity, Internet world stats puts Uganda at 31% penetration rate, more and more Ugandans are embracing e-commerce. E-commerce refers to commercial transactions conducted electronically on the Internet.

Fiona Karungi is the sole proprietor of Pretty Perfect Uganda, a jewelry and accessories store. She started her business as a shop on Instagram, a social media site, but “felt it needed a more permanent home”.

One year down the line, she created prettyperfect.com, a website that she believes has given her brand more credibility.

“Because we had decided not to go the brick and mortar route, a website was ideal. On average, we receive about 250 orders monthly, 20% of these are from the website and the remaining 80% from Instagram, Facebook, and WhatsApp,” Fiona says.

Another budding entrepreneur Vaolah Amumpaire runs a hardware store online. “Wenahardware.com is Uganda’s first hardware only online store that seeks to revolutionise buying of construction materials and everything else used by constructors,” Vaolah says.

The government’s activities.

In October 2016,the Ministry of Information Communication Technology and National Guidance through its mandated agency National Information Technology Authority Uganda (NITA-U) commenced the trial provision of free wireless access to the Internet in Kampala Central Business District and parts of Entebbe.

A quick call to NITA-U reveals that 169 Ministries, Departments and Agencies (MDAs) and Local Governments (LGs) are now connected as well as 284 residential and commercial sites.

However, in July 2018, Uganda Revenue Authority (URA), following directives from the government, imposed a tax on Over The Top (OTT) services involving applications that offer voice and messaging over the Internet. Users are charged 200 shillings ($0.0531) per day for services such as Facebook, Twitter, and WhatsApp. That amounts to around $19 per year in a country where gross domestic product per capita was around $615 in 2016, according to World Bank figures.

A 1% tax on mobile money transactions was also introduced at the same time. It has since been revised from 1 to 0.5 percent by Parliament.

A growing industry

We visited Jumia, the leading online shop in Uganda, with an average of 300,000 visitors monthly. The bulk of Jumia’s orders are placed online via mobile. Most customers buy mobile phones, electronics, and household goods like detergent and sugar.

The headquarters of Jumia, along Lumumba Avenue in Kampala, is a colourful collection of unassuming buildings that house Jumia’s services like Jumia Food and Jumia Travel. The common area is furnished in African print beanbags and pallet seats; a TV is mounted on the wall and remains off. In one corner of the lounge, an employee takes a Skype call.

Outside, in the parking lot, a fleet of delivery agents on motorcycles prepare to start their day. In the lounge is a painting of Africa on the wall with words like “Africa”, “Internet” and “leadership”. The organisation maintains a “startup attitude”. Jumia says.

“We truly believe in the power of the Internet and how it can change everyday lives, especially in Uganda,” says Neville Igasira Iguundura, Jumia’s Chief Marketing Officer. “You can save time and money by shopping online.”

Other local e-commerce sites include Kikuu, Parple Rayn, Dondolo, UgKart and 2fumbe.

Why trade online?

E-commerce offers a whole range of opportunities, like marketing, especially on social media, that can generate more sales. A website also offers customers around-the-clock, convenient service, that can boost your business.E-commerce is an ideal way to take your brand from a traditional brick and mortar store to an innovative, well-loved brand.

Due to the Internet’s accessibility, millions of people across the world can view your website at any time, meaning that for those looking to expand their businesses and reach out to a larger audience, you have many more opportunities to do so.

Social media is the simplest way to sell online. In Uganda, Facebook is the most popular site over 2 million Ugandans and presents a cost-effective way to reach all these people. Despite the social media tax, many Ugandans have found a way to circumvent this by the use of Virtual Private Networks (VPNs) that mask the users’ exact location.

There are also tools like freewebstore.com and www.mozello.com that help build free online stores.